Food Costs Fall for the 11th Consecutive Month – The Average Joe

    Food Costs Fall for the 11th Consecutive Month

    Victor Lei — Head of Research

    March 6, 2023

    March 6, 2023

    High food costs got your wallet and body weight a bit light? We have some good news for you.

    Food prices — measured by the FAO Food Price index — have steadily declined since March 2022 (at least for food manufacturers), breaking all-time highs after the Russia-Ukraine invasion last year.

    The index is:

    • Down 0.6% last month — falling 11 months in a row.
    • Down 19% compared to the previous year.

    Will consumers finally see lower prices? That depends. Food input cost is only one major expense producers deal with (i.e., transport, labor). It also takes time for falling prices to trickle down to consumers.

    But lower prices (or at least fewer price hikes) may be on their way:

    • Kraft Heinz isn’t planning any more price increases in North America, Europe, Latin America and most of Asia.
    • Tyson Foods reported lower profits from a build-up in meat supply — which has led to lower meat prices.

    Who’s fighting to lower prices? Inflation has been tough on grocers and retailers — who operate on low margins. They’ve been losing business to dollar stores, and consumers have pulled back on spending.

    And now, stores are clapping back like Chris Rock did to Will Smith in his latest comedy special.

    Per Oliver Wyman Partner Bobby Gibbs, retail chains like Walmart and Target are pushing suppliers to lower prices (WP). Retailers are threatening unfavorable shelf placement or discounted orders for those who don’t comply.

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